- Contingent Guarantee
- A guarantee of payment made by a third party, known as the guarantor, to the seller or provider of a product or service in the event of non-payment by the buyer. Contingent guarantees are normally used when the suppliers do not have a relationship with their counterpart. The buyer pays a contingent guarantee fee to the guarantor, which is generally a large bank or financial institution.
Contingent guarantees are a common feature in international trade, especially when vendors conduct business with new customers in overseas markets. Note that a contingent guarantee differs from a letter of credit (LC), which is more commonly used in international trade. The former only comes into effect upon non-payment after a stipulated period by the buyer, whereas a letter of credit is payable by the bank as soon as the seller effects shipment and satisfies the terms of the LC.
Contingent guarantees are also used as a risk-mitigation tool for large projects in nations with a high degree of political or regulatory risk, as well as in certain income-oriented financial instruments.
Investment dictionary. Academic. 2012.
Look at other dictionaries:
contingent liability — a liability which will only arise upon the happening of a certain event, for example, the guarantor of a loan being asked to honour the guarantee if the borrower defaults. Glossary of Business Terms A debt or obligation that becomes a liability… … Financial and business terms
Contingent fee — A contingent fee (in the United States) or conditional fee (in England and Wales) is any fee for services provided where the fee is only payable if there is a favourable result. In the law is defined as [a] fee charged for a lawyer s services… … Wikipedia
guarantee — n. & v. n. 1 a a formal promise or assurance, esp. that an obligation will be fulfilled or that something is of a specified quality and durability. b a document giving such an undertaking. 2 = GUARANTY. 3 a person making a guaranty or giving a… … Useful english dictionary
guarantee fund — noun a sum of money pledged as a contingent indemnity for loss … English new terms dictionary
Upstream Guarantee — A contingent liability on a subsidiary s financial statements in which the subsidiary guarantees its parent company s debt. Upstream guarantees are performed to get better financing terms for the parent or to initiate financing. An upstream… … Investment dictionary
Section 51(xxxi) of the Australian Constitution — is a subsection of Section 51 of the Australian Constitution providing that the Commonwealth has the power to make laws with respect to the acquisition of property on just terms from any State or person for any purpose in respect of which the… … Wikipedia
Kant’s moral and political philosophy — Don Becker Practical philosophy, for Kant, is concerned with how one ought to act. His first important work in practical philosophy, Foundations of the Metaphysics of Morals, provides Kant’s argument for the fundamental principle of how one ought … History of philosophy
France — /frans, frahns/; Fr. /frddahonns/, n. 1. Anatole /ann nann tawl /, (Jacques Anatole Thibault), 1844 1924, French novelist and essayist: Nobel prize 1921. 2. a republic in W Europe. 58,470,421; 212,736 sq. mi. (550,985 sq. km). Cap.: Paris. 3.… … Universalium
PHILOSOPHY, JEWISH — This article is arranged according to the following outline: WHAT IS JEWISH PHILOSOPHY? recent histories of jewish philosophy biblical and rabbinic antecedents bible rabbinic literature hellenistic jewish philosophy philo of alexandria biblical… … Encyclopedia of Judaism
international relations — a branch of political science dealing with the relations between nations. [1970 75] * * * Study of the relations of states with each other and with international organizations and certain subnational entities (e.g., bureaucracies and political… … Universalium